More than a third of Britons think interest rates will rise in the next 12 months, a survey showed yesterday, suggesting the Bank of England’s first attempt to ease concern over higher rates ahead has had little effect beyond financial markets.
The bank and its new governor, Mark Carney, will have to hope for more success with their next try — likely to come in more detailed form early next month — as they work to encourage consumers to spend more and spur economic growth.
The survey by financial data company Markit found that on top of the 35 percent of respondents who expected the Bank of England to raise rates over the next year, a further 18 percent thought it would happen in 13 to 24 months’ time.
Only 16 percent of Britons agreed with financial markets, which are predicting that the central bank will start raising interest rates in two years’ time at the earliest.
“The survey results present the Bank of England with the challenge of better communicating the prospect of an extended period of low interest,” Markit economist Chris Williamson said. “The specter of higher interest rates is a key factor restraining many of the UK’s 11 million mortgage holders from feeling comfortable about increasing their current spending.”
The outcome of survey for Markit, which was taken from July 10 to Monday last weej, chimes with the findings of a Bank of England poll of households in May, before the central bank’s latest steer on interest rates.
On July 4, after its first policy meeting under Carney, the Bank of England took the unusual step of warning that investors were predicting higher rates too soon.
That caused markets to push back expectations of the first rate rise into the second half of 2015 from the first half as thought before the announcement.
Markit’s survey found that 27 percent of respondents had no view on what would happen to rates, in a sign of uncertainty that could be also curbing consumption.